Myth #1: Not many people can be angel investors

Anyone can invest in early stage companies. (You can invest as an “unaccredited investor” in certain situations or platforms, subject to limits on how much you invest and rules on how many other unaccredited investors are investing with you. But for simplicity, we’re only talking about accredited angel investors.)

To be an angel that invests in multiple companies with management teams you don’t already know, you really need to be an accredited investor. That does not mean you need to sit an exam and receive “an accreditation.” It simply means you have a certain level of net worth or annual income.

These levels are defined by the Securities and Exchange Commission, at $1 million of net worth (excluding your primary residence) or annual income over $200,000 for individuals (for the last two years and expected this year) or $300,000 for couples.

(There are potential changes to this definition, to allow people with “expertise” (e.g. CFAs) to be angels even if they don’t hit the thresholds, or to index-link the thresholds, but this doesn’t really change the overall point.)

So how many people are there that could be angel investors? The national Angel Capital Association estimates over four million people in the US are accredited by wealth. An estimate by Deloitte put the figure for millionaire households (a pretty good proxy) in South Carolina at around 110,000 in 2010 and 190,000 by 2015, and for North Carolina around 287,000 in 2010 climbing to 431,000 by 2015.

(Here is the pdf of that study. The study was from 2011, and, given the economic growth and inward migration to the southeast since, the total is probably nearer the 2015 estimates.)

How many actually are angel investors? The ACA again provides a national estimate of 300,000 people making an “angel investment” in the last two years, similar to the number of angel investors calculated by the University of New Hampshire’s Center for Venture Research of 304,950 in 2015.

Data for the Carolinas specifically is not available (as far as I know). Assuming angels are spread proportionally by overall population (an obviously wrong assumption), there would be around 14,000 active angels in the Carolinas. Assuming the ratio of millionaire households according to the Deloitte survey (so roughly 621,000 millionaire households in the Carolinas of a total 15.5 million millionaire households) multiplied by 300,000 active angels gives around 12,000 active angels in the Carolinas. I would guess it is a good bit lower in reality.

Whatever the exact figures, there are a good number of people making angel investments in the Carolinas, and many multiples more who could be.